Chris Auld wrote:
>Suppose that some behavior is affected by information provided by official
>sources. Suppose further that by distorting or withholding information
>the official may change behavior in a socially desirable manner (ignore
>credibility issues). Should the official engage in such manipulations?
>... health officials deliberately over-emphasize the dangers of smoking?
>... appears to be exactly what has happened (see Viscusi JPE 1990).
>Does anyone know of any literature on this or similar topics?
If consumers can be considered roughly rational about such things, then my
paper below seems relevant. This is basically a question of cheap talk
equilibria, which is basically a commitment issue. Ex post, the official
can gain by manipulating, but ex ante, the official can gain by committing
to not manipulating. If you can commit to always being truthful, then
people will believe what you say more, which is good on average. But if
you haven't committed, then sometimes you can gain by lying.
---
Journal of Public Economics, 85(2):301-317, August 2002
http://hanson.gmu.edu/bandrug.pdf or .ps
Warning Labels as Cheap-Talk:
Why Regulators Ban Drugs
by Robin Hanson
One explanation for drug bans is that regulators know more than consumers
about product quality. But why not just communicate the information in
their ban, perhaps via a ``would have banned" label? Because product
labeling is cheap-talk, any small market failure tempts regulators to lie
about quality, inducing consumers who suspect such lies to not believe
everything they are told. In fact, when regulators expect market failures
to result in under-consumption of a drug, and so would not ban it for
informed consumers, regulators ex ante prefer to commit to not banning this
drug for uninformed consumers.
---
Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-
703-993-2326 FAX: 703-993-2323
